We have been in the auction and appraisal business for decades. We’ve written about the appraisal industry many times and have consistently held an appraisal is an opinion, estimate, and sometimes no more than a guess.
Yet, a true appraisal is an opinion of value as of a certain date that is supportable by objective evidence. So it would seem an opinion lacking an effective date and supportable evidence could maybe be something else?
We’ve written about expressed warranties as well as implied warranties many times. We’ve also written about puffing or sales talk, which is essentially “legal exaggeration.” Our analysis today regards an auctioneer selling something at auction, noting the property is worth so much.
For instance, an auctioneer is selling this Edward Lear painting and expressing it is worth $375,000. It is put up for auction and sells for $42,000. The buyer takes the painting to an art appraiser who says it is worth no more than $50,000. What can the buyer do?
Of course, it sold for $42,000 so it’s worth $42,000, right? https://mikebrandlyauctioneer.wordpress.com/2015/09/07/does-an-auction-price-equal-market-value/. Nonetheless, the auctioneer/seller said it was worth $375,000, and apparently (or obviously) it’s not.
We’ve written about auctioneers’ inability to disclaim any expressed warranties: https://mikebrandlyauctioneer.wordpress.com/2021/06/21/can-an-auctioneer-disclaim-an-express-warranty/. We’ve also implied that auctioneers should not disclaim implied warranties: https://mikebrandlyauctioneer.wordpress.com/2022/08/22/expressed-implied-and-fitness/.
Many auction houses provide pre-auction estimates and most want to come in lower than the actual market value so their performance is viewed as extraordinary. What if the auction price is much lower than the pre-auction estimate? https://mikebrandlyauctioneer.wordpress.com/2017/06/22/coming-in-waaaaaay-below-the-pre-auction-estimate/.
Maybe the question really is: When the auctioneer said this painting is worth “$375,000” was that substantiated with an actual appraisal? Was that appraisal provided to bidders prior? If, on the other hand, there was no actual appraisal, and the auctioneer simply said, “This painting is worth …?” Is merely expressing that considered an appraisal? Likely not.
This seems a precarious place to find oneself — expressing something is worth $375,000 and then the buyer finds out it’s not. Importantly, the auctioneer said, “This is an Edward Lear painting” but what if the buyer finds out it’s not? The buyer could demand a refund … as you can’t disclaim expressed warranties.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at Mike Brandly, Auctioneer, Brandly Real Estate & Auction, and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, and an Instructor at the National Auctioneers Association’s Designation Academy and Western College of Auctioneering. He has served as faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.